The NZD/USD pair remains in positive territory, trading at approximately 0.5670 during the early Asian session on Thursday. The New Zealand Dollar (NZD) saw modest gains, bolstered by new stimulus announcements from both New Zealand and China. Market participants are also preparing for the release of the US weekly Initial Jobless Claims data later in the day.
Former President Donald Trump recently made headlines with remarks indicating that his administration is contemplating a 10% tariff on Chinese-made goods entering the US, potentially taking effect on February 1. This development comes on the heels of another tariff threat, this time targeting imports from Mexico and Canada, which Trump suggested could see a 25% tariff imposed starting on the same date. These renewed trade tensions between the US and China, combined with concerns over Trump’s tariff threats, could put downward pressure on the NZD, which is often seen as a proxy for the Chinese economy due to New Zealand’s significant trading relationship with China.
However, the NZD’s losses may be capped by supportive economic measures from both nations. On Thursday, New Zealand’s Prime Minister Christopher Luxon announced plans to ease foreign investment regulations in a bid to attract and bolster investment flows into the country.
In China, fresh stimulus steps were also unveiled. Chinese officials revealed several initiatives aimed at stabilizing the domestic stock market, including allowing pension funds to increase their investments in Chinese equities. The government has committed to injecting hundreds of billions of Yuan annually into A-shares through state-owned insurance companies, with additional capital market investment expected from large state-run commercial insurers.
These coordinated fiscal and monetary measures from both New Zealand and China are expected to provide some relief to the NZD, potentially mitigating the negative impact of global trade tensions and tariff concerns.
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